Many a night, usually during what would be considered “Prime Time” for TV, my wife complains that the Internet is slow. She isn’t trying to watch video, and most of the time when she makes this complaint no one is watching video in our house. When I investigate these complaints what I find is that our 10 Mb/s rated primary Internet connection is only delivering 2-3 Mb/s. During off hours that connection delivers close to its 10Mb/s rating, and sometimes speedtest.net even shows it exceeding that. So why do we drop by 5x during the evening? Our neighbors are all watching Netflix or other video services.

The situation isn’t specific to our primary Internet connection. We have a secondary connection, mostly for backup but also so that if someone is streaming video it doesn’t bring other Internet usage to a grinding halt. It displays the same pattern of achieving close to its rated speed at off-peak hours but shows a 5x degradation during prime video watching times.

In our condo up on Seattle’s Eastside, where we have outstanding Internet connectivity, things are only marginally better. Although rated to have plenty of bandwidth for showing even HDX movies you can’t actually get through an HDX movie during prime video watching hours without major buffering pauses. Or the connection even being dropped. I’ve tried both FIOS and Xfinity with the same results.

And this isn’t just us, this is the state of the Internet. Just about no one sees the rated speed of their connection for more than brief periods of time usually during off-peak hours. The infrastructure of Comcast, Verizon, and their cohorts just wasn’t designed to deliver peak performance to every user over long periods of time. And if you take video off the table, it doesn’t really need to be.

But video is growing and the networks underlying the Internet need major upgrades to keep up. How do you pay for the upgrades?

Now let me get out-of-the-way that I’m a major free market kind of guy, so I don’t think the government should be interfering in this. How and who should be paying for communications services should be between customers and the companies they buy services from. When the government gets involved then it picks winners and losers. And it won’t be the communications companies, they will end up OK no matter what the answer. The government is picking which customers win and lose.

Net Neutrality turns the question of do senders or receivers pay telecommunications providers for the traffic on the Internet into a simple answer, the receivers pay the telecom companies. It really is that simple. In a strict Net Neutrality world home (and business) Internet prices have to rise a lot, or cell phone plan-style pay by the GB plans have to replace unlimited service, to support building out the infrastructure to handle all the new traffic. Without Net Neutrality the telecommunications providers have more freedom to get the sender to pay, so that the costs of streaming video is directly tied to those services and not forced on infrequent users of those services.

As I said, if government is involved then they’ll pick winners and losers. And the reality of the second decade of the 21st century is that Net Neutrality means people who make heavy use of video streaming services, as well as the companies that operate those services, win. Those who make little, light, or even moderate use of video streaming lose. They’ll either continue to suffer degraded performance, or pay substantially higher prices, to subsidize their neighbors’ video watching habits.

Now it might turn out that a proposal AT&T made a while ago, if I understood it correctly, is the right balance in all of this. AT&T, coming at this from the standpoint of a company that does charge (wireless) customers by GB consumed, proposed to optionally allow the sender to pay for data that would not count against the receiving customer’s data limit. Net Neutrality fans went nuts of course, but AT&T’s proposal makes tremendous sense. Particularly if we are all forced into capacity-based pricing at home because of Net Neutrality. Imagine Netflix continuing to offer their $7.99 plan unchanged from today. That would work great for light users of the service. But heavy users who found that their base Internet service at home was now limited to 25GB per month, and then having to pay overage charges, might be more interested in paying for a $11.99 plan from Netflix that didn’t use up any of that 25GB. The AT&T proposal is the kind of innovative solution that I’d expect if the government doesn’t get in the way. Sadly they seem intent on getting in the way.

The reason Net Neutrality gives me a headache is because it isn’t neutral at all. Any way you slice it we need more money put into the infrastructure of the Internet. And having the government pick who is going to pay is going to end badly for me, and I believe for the vast majority of users of the Internet.

12 Responses to “Net Neutrality” gives me a headache

You can have net neutrality and transfer limits, both at the same time. Transfer limited subscriptions would mean that the small users pay less, net neutrality makes for better competition in internet services.

Net neutrality and fair prices are not opposites. You could have net neutrality and transfer limited subscriptions at the same time. Transfer limits mean that small users pay less, which is the fairness you’re looking for. Net neutrality forces ISP to keep the internet open and the rules fair for all parties on the internet. Hence we’d have a better marketplace (and, coupled with that, more innovation, lower prices, etc.).

The argument for a free market simply doesn’t work when your only option is from one (or if you’re lucky two) major ISPs in your area. Without competition ISPs are free to do what they want, including limiting VOD services, biasing their own services etc..

In the world of net neutrality the consumer pays all, but they will be paying for a cheaper service from the service providers, if the service providers are not paying sending fees. So, is there really that much difference?

There are two problems here:
1) The ISPs are effectively monopolies in their geographic areas. If you don’t like their service, too bad. As I mentioned a while back, we moved a few miles and as a result left the Time-Warner monopoly area and into an AT&T monopoly area.
2) The ISPs should be, but are not, simply providers of internet connectivity. They are also content providers and thus have an incentive to ensure their content has an advantage over their competitors content. Several years ago, a small telecom/ISP decided they didn’t want to compete with Vonage for VOIP customers, so they simply blocked all VOIP packets that weren’t their VOIP service. The FCC had to step in and order them to stop blocking the other VOIP providers packets. Comcast, which has the largest incentive to favor their content over their competitors, due to their ownership of NBC and other content, was exempting the content from some of their services from their customers data caps.

It is because of the above kinds of problems, that we need some kind of regulations to protect consumers from the anti-competitive behavior of ISPs. It may be that Net Neutrality is not the best way to do this, but an entirely “free market” would lead to even worse monopolies than we already have, due mainly to the extremely high cost of entry for competitors. Starting in the late 70’s, the government had to grant monopolies to the cable companies to get them to make the capital investment required to run cables to all the properties in their service areas.

In the mid 90’s, I lived in an area where Time-Warner was the sole cable and internet provider and every year my cable and internet prices went up. At one point, GTE decided to get into the cable and internet service in that area and dug a trench through everyone’s yards and laid their own cable. Suddenly, my Time-Warner bill stopped going up on an annual basis, but my friends who lived in the part of town where Time-Warner was the only cable and internet provider continued to see their bills go up on an annual basis. I left the area a few years later so I don’t know what the current status is, but we definitely need competition in the cable and internet service business.

Charging users usage-based (per-GB, not by content type) prices is perfectly consistent with Net Neutrality. Allowing senders to pay the usage charges for users is closer to the line, but as long as the rates were published and were a simple per-GB rate that any sender could avail themselves of, no matter their volume, I’d have no problem with it. But that would only happen, you guessed it, with government regulation.

Broadband service in the US is not some mythical perfectly competitive market that will take care of itself. Most places only have two providers — the cable company and the phone company — and often only the cable company can deliver truly high speeds. Government power isn’t the only kind of power you should fear — the government’s much more accountable than your local cable company. Unchecked, Comcast, not users, would get to demand protection money from every startup on the Internet.

I am inclined to dismiss the “ISP is a monopoly” argument. But I need to know more about the technology to know for sure.

Are there any standards, rules for wireless “n” routers in terms of one router providing service to multiple homes/users? What if someone in your neighborhood wants to go into business with netflix. They will cache the netflix content. And then local users run software that connects their home network with this local community netflix server network. Are there wireless frequencies available that have a little more range than “n” class routers? Hope I am being clear. Is it technically possible for there to be wireless servers in a neighborhood that could provide internet service to homes within a 1/2 mile radius? The short distance serving the purpose of preventing the local server from being overwhelmed with traffic.

It is technically possible for just about anything. I probably don’t have the terminology 100% correct, but the FCC regulates devices that operate in the bands used by WiFi routers. For example, cordless phones operate in at least one of the bands used by WiFi. These bands are somewhat free in that no one has an exclusive use license from the FCC to use those bands, but all devices operating in those bands must comply with the FCC regulations for those bands and I’m sure they include power limitations to keep an individual from building a very high powered WiFi router and blocking out all the other WiFi routers in the subdivision. Your idea for a neighborhood Netflix cache would violate the contract between Netflix and the content providers.

This entire article is based on a flawed premise right from the start:

“Net Neutrality turns the question of do senders or receivers pay telecommunications providers for the traffic on the Internet into a simple answer, the receivers pay the telecom companies.”

Actually customers (whether it’s you, me, or Netflix) pay for both sending and receiving. A service provider, like Netflix, is just sending more and a customer, like yourself, is just receiving more.

So the issue is of Net Neutrality isn’t whether the sender or receivers pays. Netflix pays for it’s bandwidth and you pay for yours. It isn’t even about how much you’re sending/receiving or how you’re paying for it. It’s about whether Telecoms can discriminate (by degrading service or adding a surcharge) based on what is being sent or who is sending it.

> But video is growing and the networks underlying the Internet need major upgrades to keep up.

If the Telecom providers need major upgrades, they can simply charge more for bandwidth. They can charge you more and they can charge their peers more which would cascade to Netflix playing more. And it’s perfectly fair, because everyone would be paying the same amount for the bandwidth they are using (up or down).

But Telecom providers don’t want to pay for upgrades so you use their cheap dumb pipe to get video content from their competitors. Video is a huge profit center for them. So instead of all bytes being neutral, they want to degrade the service or add a surcharge to just some bytes because they carry video or come from a particular service provider. Does that sound fair or right to you?

Under the current dynamics no net neutrality means profit motivated businesses – and not their customers! – get to pick the winners and losers; how is that any better than the government doing it? Even when you put aside the ISP’s regional monopolies and the fact that they’re all in the content delivery game to begin with and can prioritize their own products, there are other problems; under AT&T’s set up, a company like Netflix that’s very successful and can afford to pay the data fees has an even bigger advantage over a new entrant, who won’t have the financial base to do so. This further entrenches existing players in their markets, and makes competition even harder. It’s its own market distortion.

And it’s kinda funny that you think that ISPs being able to extract more rents from content providers is going to inspire them to build out their infrastructure; Verizon and Comcast are making a lottttt of profit. If they’re not providing quality service it isn’t because they’re hurting for money, it’s because they have no reason to spend any more on making sure you reach your rated data speeds; you will be paying them the same regardless, and their competitors, to the extent that they even have any, aren’t going to be much better, so there’s no where for you to go. They’ll pocket it and you’ll still have slow internet. Unless you’re suggesting that higher fees is a way to drive down Netflix usage and thereby improve your experience? Unlike getting ISPs to spend money on infrastructure, without relying on coercion, that might actually happen, but if you want to talk about getting to pick winners and losers…

Forgot to say: It isn’t like plenty of countries haven’t figured out how to pay for quality internet without extracting rents on content providers; most of Europe and much of industrialized Asia has much lower costs per megabyte/s than we do, even in our major urban areas where we have the highest population density.

Totally with you. I live in Spain, and as you probably know, it is not the most IT advanced country in Europe, my internet connection is 100mb/10mb , and I’m getting 99% of that speed almost all the time. There is a lot of competition here and internet speeds are becoming better and better, I can’t belive the situation is so bad in US about internet speeds (so “And this isn’t just us, this is the state of the Internet. Just about no one sees the rated speed of their connection for more than brief periods of time usually during off-peak hours” is basically wrong , maybe in your zone, maybe in US? I don’t know, but given internet reaches all countries this is a very very broad assumption….) , and it is all about ISP getting maximum profits without spending on infrastructures . It’s not Spotify problem that your o mine internet connection is slow, or that your ISP screw you and make you share your paid bandwith with your neighbors, as it’s not amazon problem if my package arrives later than expected because the infrastucture in my town. Totally agree with you Eolirin with “And it’s kinda funny that you think that ISPs being able to extract more rents from content providers is going to inspire them to build out their infrastructure” . more than funny I think it’s a little naive ….